Ethics and Professional Standards
Code of Ethics
The member and candidates to get the CFA® designation must follow the given directions
(underlying fundamental values the members and candidates must have. The standards are based
on these codes):
 Act with integrity, competence, diligence, respect, and in an ethical manner with the
public, clients, prospective clients, employers, employees, colleagues in the investment
profession, and other participants in the global capital markets.

Place the integrity of the investment profession and the interests of clients above their
personal interests.

Use reasonable care and exercise independent professional judgment when conducting
investment analysis, making investment recommendations, taking investment actions, and
engaging in other professional activities.

Practice and encourage others to practice in a professional and ethical manner that will
reflect credit on themselves and the profession.

Promote the integrity and viability of the global capital markets for the ultimate benefit of the
society.

Maintain and improve their professional competence and strive to maintain and improve
that of the other investment professionals.
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Standard I – Professionalism
A. Knowledge of the Law: Members and candidates:
 Must understand and comply with all applicable laws, rules, and regulations (including the CFA Institute Code of
Ethics and Standards of Professional Conduct) of any government, regulatory organization, licensing agency, or
professional association governing their professional activities.
 Must comply with the more strict law, rule, or regulation in the event of conflict.
 Must not knowingly participate or assist in and must dissociate from any violation of such laws, rules, or regulations.
B. Independence and Objectivity: Members and candidates:
 Must use reasonable care and judgment to achieve and maintain independence and objectivity in their professional
activities.
 Must not offer, solicit, or accept any gift, benefit, compensation, or consideration that reasonably could be expected
to compromise their own or another’s independence and objectivity.
C. Misrepresentation:
 Members and candidates must not knowingly make any misrepresentations relating to the investment
analysis, recommendations, actions, or other professional activities.
D. Misconduct:
 Members and candidates must not engage in any professional conduct involving dishonesty, fraud, or
deceit, or commit any act that reflects adversely on their professional reputation, integrity, or competence.
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Standard II – Integrity of Capital Markets
A. Material Non-Public Information:
Members and candidates who possess material non-public information that could affect the value
of an investment must not act or cause others to act on the information.
B. Market Manipulation:
Members and candidates must not engage in practices that distort prices or artificially inflate the
trading volume with the intent to mislead market participants.
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Materiality
Awareness
Remarks
Material
Non-public
Not Allowed
Material
Public
Allowed
Non-material
Public
Allowed
Non-material
Non-public
Allowed
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Standard III – Duties to Clients
A. Loyalty, Prudence, and Care: Members and candidates:
 Have a duty of loyalty to their clients and must act with reasonable care and exercise prudent
judgment.
 Must act for the benefit of their clients and place their clients’ interests before the
management’s or their own interests.
 Must determine the applicable fiduciary duty and comply with such duty to persons and
interests to whom it is owed, in relationships with the clients.
B. Fair Dealing:
Members and candidates must deal fairly and objectively with all clients when providing investment
analysis, making investment recommendations, taking investment action, or engaging in other
professional activities.
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Standard III – Duties to Clients
C. Suitability:
 When members and candidates are in an advisory relationship with a client, they must –
• Make a reasonable inquiry into a client’s or prospective client’s investment experience, risk
and return objectives, and financial constraints prior to making any investment
recommendation, or taking investment action, wherein they must reassess and update this
information regularly.
• Determine that an investment is suitable to the client’s financial situation and consistent
with the client’s written objectives, mandates, and constraints before making an
investment recommendation or taking investment action.
• Judge the suitability of investments in the context of the client’s total portfolio.
 When members and candidates are responsible for managing a portfolio to a specific mandate,
strategy, or style, they must only make investment recommendations or take investment actions
that are consistent with the stated objectives and constraints of the portfolio.
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Standard III – Duties to Clients
D. Performance Presentation:
When communicating investment performance information, members or candidates must make
reasonable efforts to ensure that it is fair, accurate, and complete.
E.
Preservation of Confidentiality:
Members and candidates must keep information about the current, former, and prospective clients
confidential unless:
 The information concerns illegal activities on the part of the client or prospective client
 Disclosure is required by law
 The client or prospective client permits to disclose the information
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Standard IV – Duties to Employers
A. Loyalty:
In matters related to their employment, members and candidates must act for the benefit of their
employer and not deprive their employer of the advantage of their skills and abilities, divulge
confidential information, or otherwise cause harm to their employer.
B. Additional Compensation Arrangements:
Members and candidates must not accept gifts, benefits, compensation, or consideration that
competes with, or might reasonably be expected to create a conflict of interest with, their
employer’s interest unless they obtain written consent from all parties involved.
C. Responsibilities of Supervisors:
Members and candidates must make reasonable efforts to ensure that anyone subject to their
supervision or authority complies with the applicable laws, rules, regulations, and the code
and standards.
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Standard V – Investment Analysis, Recommendations, and Actions
A. Diligence and Reasonable Basis:
A
Members and candidates must –
 Exercise diligence, independence, and thoroughness in analyzing investments, making
investment recommendations, and taking investment actions.
 Have a reasonable and adequate basis, supported by appropriate research and investigation,
for any investment analysis, recommendation, or action.
B. Communication with Clients and Prospective Clients:
Members and candidates must –
 Disclose to clients and prospective clients the basic format and general principles of the
investment processes used to analyze investments, select securities, and construct portfolios
and must promptly disclose any changes that might materially affect those processes.
 Use reasonable judgment in identifying which factors are important to their investment analyses,
recommendations, or actions and include those factors in communications with clients and
prospective clients.
 Distinguish between fact and opinion in the presentation of investment analysis and
recommendations.
 Disclose to clients and prospective clients the significant limitations and risks associated
with theinvestment process.
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Standard V – Investment Analysis, Recommendations, and Actions
C. Record Retention:
A
Members and candidates must develop and maintain appropriate records to support their
investment analysis, recommendations, actions, and other investment-related communications
with clients and prospective clients.
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Standard VI – Conflicts of Interest
A. Disclosure of Conflicts:
Members and candidates must –
 Make full and fair disclosure of all matters that could reasonably be expected to impair their
independence and objectivity or interfere with respective duties to their clients, prospective
clients, and employer.
 Ensure that such disclosures are prominent, are delivered in plain language, and
communicate the relevant information effectively.
B. Priority of Transactions:
Investment transactions for clients and employers must have priority over investment
transactions in which a member or candidate is the beneficial owner.
C. Referral Fees:
Members and candidates must disclose to their employer, clients, and prospective clients, as
appropriate, any compensation, consideration, or benefit received from, or paid to, others for
the recommendation of products or services.
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Standard VII – Responsibility as a CFA Institute Member/Candidate
A. Conduct as Participants in CFA Institute Programs:
Members and Candidates must not engage in any conduct that compromises the reputation or
integrity of the CFA Institute or the CFA designation or the integrity, validity, or security of CFA
InstitutePrograms.
B. Reference to the CFA Institute, the CFA® Designation, and the CFA® Program:
When referring to CFA Institute, CFA
Institute membership, the CFA® designation, or candidacy in
Abbreviation to memorize: CR
the CFA® Program, members and candidates must not misrepresent or exaggerate the meaning or
implications of membership in the CFA Institute, holding the CFA® designation, or candidacy in the
CFA®Program.
or C Institute, the CFA® designation
and the CFA® Program
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Thank You!
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